NCLT Dismisses Insolvency Plea Against Dunzo

In a big relief to the hyperlocal delivery startup Dunzo, the Bengaluru bench of National Company Law Tribunal (NCLT) has reportedly dismissed an insolvency plea against the startup filed last year by one of its creditors – Invoice Discounters of Dunzo Digital Pvt Ltd. 

A Mint report said that an NCLT bench led by Justices Sunil Kumar Aggarwal and Radha Krishna Sreepada held that the insolvency petition was not maintainable and dismissed it.

According to an order dated May 29, 2024, Dunzo and its financial creditor Invoice Discounters of Dunzo Digital Pvt Ltd had sought more time before the bench as settlement talks were underway between the parties. The bench also directed Dunzo to file a reply to the writ petition within two weeks if the settlement talks do not go through. 

In the next hearing, the creditor said before the bench that settlement talks had fallen apart, following which Dunzo’s right to reply on the petition was forfeited. 

Invoice Discounters of Dunzo Digital Pvt Ltd had said that the Kabeer Biswas-led startup had only cleared 50% of their dues. Although, the total amount of dues Dunzo owed to the creditor is still unknown.  

Multiple vendors, including Betterplace Safety Solutions, Google India, Nilenso, Clover Ventures, Facebook India, Cupshup, Koo and Glance have filed insolvency against the startup for their pending dues.

While Dunzo owes about INR 4 Cr to Betterplace Safety Solutions, the Bengaluru-based startup collectively owes INR 11.4 Cr to Google India, Nilenso, Clover Ventures, Facebook India, Cupshup, Koo and Glance. 

Founded in 2015 by Biswas, Dalvir Suri, Mukund Jha, and Ankur Aggarwal, Dunzo connected consumers with nearby stores and facilitated deliveries of products including groceries, medicines, and food, among other daily needs. However, its foray into the quick commerce space with Dunzo Daily led to a sharp increase in its cash burn and the downfall became inevitable. 

Though Biswas tried to sell-off Dunzo to players like Flipkart, PhonePe and Swiggy, but the talks did not materialise. 

In January, Dunzo pulled its plug on its mobile application and Biswas joined Flipkart to lead the operations of its quick commerce arm Munites.

According to Dunzo’s financial statements for the fiscal year ended March 31, 2023 (FY23), its net loss shot up 288% to INR 1,801 Cr from INR 464 Cr in the previous fiscal year. However, the startup’s operating revenue increased 317% to INR 226.6 Cr from INR 54.3 Cr in FY22. 

However, Dunzo did not file its financial statements for FY24.